Apple hits iPhone sales target ahead of forecast

SAN FRANCISCO (MarketWatch) - After a week of dealing with negative customer reaction to the surprise cut in the price of its iPhone, Apple Inc. said Monday that it reached its goal of selling its 1 millionth device almost three weeks ahead of schedule.

Apple
AAPL, +1.71%
said in a statement that it sold the 1 millionth iPhone on Sunday, just 74 days after the device was releasd on June 29.

Chief Executive Steve Jobs contrasted the iPhone's rapid sales with the adoption of the iPod, Apple's hugely popular digital music player, which Jobs said took two years to reach the one million sales mark.

Monday's announcement came after a rough week for the consumer electronics maker. At an Apple event on Sept. 5, Jobs cut the price on the 8-gigabyte version of the iPhone by $200 to $399. The company also lowered the price on the 4GB version by $200 but said it will only sell that device until supplies run out.

The unexpected price cut spooked investors, who feared that it was a sign that iPhone sales were behind expectations. Apple's shares fell more than 5% that day. See full story.

Jobs had reiterated the company's goal of selling 1 million iPhones by the end of September. By the end of the week, he also felt the need to apologize to customers who waited in line and paid full price for the iPhone after its launch in late June. He said the company would give them a $100 Apple store credit if they weren't already covered by an Apple rebate. See full story.

Prior to the 1 millionth sales announcement, analyst Chris Whitmore, of Deutsche Bank, said he thought cutting the price of the iPhone would speed up sales for the device, and compared Apple's move to a similar one taken by Motorola Inc.
MSI, -0.23%
shortly after it released its then-hot RAZR mobile phone in 2005.

Whitmore said that when Motorola cut the price of the RAZR to $315 from $450--a percentage reduction close to Apple's iPhone price cut--the company saw a 90% increase in the RAZR's unit sales. Whitmore said that it would be difficult to quantify the demand increase for the iPhone based on the price cut, "we believe iPhone sales are already improving from solid levels."

With support from the iPhone sales figures, Apple's stock rose $4.94, or 3.8%, to close at $136.71 Monday.

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